Russia's flagship airline to take over domestic rival

AP News
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Posted: Sep 01, 2015 12:34 PM

MOSCOW (AP) — Russia's second-largest passenger airline, the struggling Transaero, will be taken over by the country's top carrier, Aeroflot.

Transaero said Tuesday in a statement that its "consolidation ... into the Aeroflot group" has been approved by a government commission headed by Deputy Prime Minister Igor Shuvalov.

The commission found a takeover would be "in the interests of the further development of civil aviation and the creation of one of the largest air-transport groups in the world," Transaero said.

Financial terms were not disclosed.

Transaero has been struggling with debt at a time when Russia's economic problems have buffeted the airline industry. The company had debts of 67.5 billion rubles ($1 billion) as of June 30, according to its report for the first half of the year.

State-controlled Aeroflot told Russia's Interfax news agency that "Transaero's activities will be restructured and integrated at the operational level."

Transaero and Aeroflot compete on many domestic and international routes, meaning that a takeover may lead to significant duplication.

Aeroflot led Russian airlines by transporting 14.6 million passengers on domestic and international routes in the first seven months of the year, compared to 7.5 million for Transaero, according to Russia's Federal Air Transport Agency. The next biggest airline, S7, transported 4.5 million passengers.